Why the GOP’s Debt-Financed Tax Cuts Could Come Back to Haunt Them

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Republicans keep saying that their tax cut plan will pay for itself, despite a profound lack of evidence to support that argument. Even the most optimistic study, from the conservative-leaning Tax Foundation, found that the tax plan would add more than $500 billion to the deficit over 10 years — still a long way from being “a revenue producer,” as Senate Majority Leader Mitch McConnell recently claimed.

Why are Republicans claiming gains beyond even the most optimistic study? “The most generous interpretation is that they are operating with unsupportable optimism that these cuts will do something no other tax cuts have ever done — pay for themselves,” conservative Washington Post columnist Jennifer Rubin wrote the other day. “The faux deficit hawks who voted for the bill may have convinced themselves of something that just isn’t so.”

The other interpretations, of course, are far less kind. One of the other options Rubin raises: Republicans “simply don’t want to fess up that they’ve abandoned fiscal sanity in search of a political win and to soothe donors.” And you don’t have to be a complete cynic to see a long-term GOP plan coming together, as Democrats and other critics have charged. “Now the GOP is back in unified control of Washington, they are sensibly advancing key party priorities rather than trying to impress journalists with how ‘responsible’ they are,” Vox’s Matthew Yglesias writes.

“Republicans are preparing to use the swelling deficits made worse by the package as a rationale to pursue their long-held vision: undoing the entitlements of the New Deal and Great Society, leaving government leaner and the safety net skimpier for millions of Americans.”

“Speaker Paul D. Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, ‘We’re going to go into welfare reform.’”

Indeed, Ryan said Wednesday that congressional Republicans will focus next year on cutting spending on federal health care and welfare programs. “We're going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit," he said during an appearance on a talk radio show. "Frankly, it's the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements — because that's really where the problem lies, fiscally speaking."

Whatever interpretation you choose to believe, it’s clear that the GOP tax plan doesn’t tackle the hardest choices necessary to accomplish comprehensive reform experts have long called for, and it’s all but certain to add hundreds of billions of dollars — and possibly much, much more — to the deficit.

But from the GOP’s perspective, a win’s a win, and the Republicans desperately needed one. Even so, the party’s abandonment of debt concerns and their dismissal of independent analyses in pursuit of a short-term political victory could have broader implications should Democrats choose to follow the same game plan when they get their turn. Vox’s Ezra Klein:

"If there are congressional Republicans out there who aren’t pure nihilists, who really do worry about debt and process and the future of the country, they should think a bit harder about what they are unleashing. American politics is governed as much by norms as by rules, as much by expectations of what the other side will do to you as by beliefs about what’s right for you to do to the other side. They should imagine their process, their rules, their blithe dismissal of debt and deficits and arithmetic and process, applied to the vast suite of social democratic spending that today’s Democratic Party wants. They should imagine how tinny, how hypocritical, how cynical they will sound when they complain."

Then again, hypocrisy and cynicism might just be the winning formula in today’s politics.

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.